2015 (3) TMI 324 - HC - Indian Laws

Application for Judgement on admission - Default in repayment of debt - Lack of jurisdiction - Held that - The issue of lack of territorial jurisdiction of this court sought to be raised by the defendant also cannot be accepted.The suit was instituted with leave under Clause 12 of the Letters Patent, 1865. The defendant has made no application for revocation of such leave. From the averments in the petition I find that a substantial part of the cause of action of the plaintiff arose within the jurisdiction of this court. On that basis, leave under Clause 12 of the Letters Patent was granted. So long as such leave subsists, the defendant cannot be allowed to contend that this court lacks territorial jurisdiction to entertain and try the present suit. The receipt of ₹ 3,69,00,000/- has been admitted by the defendant. The defence against the plaintiff s claim sought to be raised by the defendant is that such money was advanced by the plaintiff to the defendant against pledge of shares of and in the defendant company by a sister concern of the defendant company. No evidence of such pledge has been annexed to the pleading filed by the defendant. The plaintiff has categorically denied any such pledge. The case of defendant s shares having been pledged with the plaintiff also lacks credibility as in paragraph 3(b) of the affidavit-in-opposition, the defendant states that share certificates were delivered to the plaintiff whereas in paragraph 6 at page 12 of the affidavit-in-opposition, the defendant craves leave to produce the copy of the Demat Slip along with relevant document of transfer of shares at the time of hearing. Shares of a company cannot be both in physical form as well as Demat form. Thus, the defendant s case of pledge is inconsistent and cannot be accepted. For the reasons aforesaid, this application succeeds. There shall be a final judgment and decree for a sum of ₹ 3,69,00,000/- along with interest at the rate of 18% per annum from 1st September, 2013 till the date of filing of the suit. There will be a decree for interim interest and interest on judgment at the rate of 12% per annum from the date of filing of the suit till payment of the decreetal amount by the defendant.

Summary

Issues:
Application for judgment on admission of a sum of Rs. 3,69,00,000.

Detailed Analysis:
1. Plaintiff's Case: The plaintiff provided a short-term loan to the defendant, which was acknowledged through bank transfers and cheques. However, the defendant failed to repay the amount, leading to the plaintiff filing a suit for recovery.

2. Defendant's Defense: The defendant claimed that the amount received was against the pledge of shares, and blank cheques were given as security, not for discharge of liability. The defendant also argued that the court lacked jurisdiction and the suit was premature due to interest terms.

3. Court's View: The court noted the defendant's admission of receiving the amount and the acknowledgment of repayment in a letter. The court rejected the jurisdiction challenge, as a substantial cause of action arose within its jurisdiction. The court found the defendant's defense of pledged shares inconsistent and not credible.

4. Judgment: The court relied on the defendant's admission and rejected the defendant's defense as inconsistent and not bona fide. A final judgment was passed for the repayment amount with interest. The court also maintained an interim order and awarded costs to the plaintiff. The court allowed a claim for compensation to stand trial separately.